Microsoft Has No Plans To Make Another Smartphone, Exec Says

SAN FRANCISCO (Dow Jones)–Microsoft Corp. (MSFT) is going to stick to core businesses and has no plans to develop a new smartphone device, such as its ill-starred Kin handsets, the chief financial officer of Microsoft’s mobile-communication business said Thursday.

Bloomberg News

Microsoft Kin

“We are in the software business and that is where our business will be focused,” Tivanka Ellawala told investors at a conference in San Francisco. He made the remark in response to a question about rumors that the Redmond, Wash.-based behemoth is working on a new phone.

Ellawala’s comments come as Microsoft tries to rejuvenate its mobile-phone business with a new operating system, dubbed Windows Phone 7. It also comes as a growing number of software giants, including Oracle Corp. (ORCL) and Hewlett-Packard Co. (HPQ), move outside of their traditional markets to offer customers integrated hardware and software products.

Microsoft’s mobile business has suffered, while Apple Inc.’s (AAPL) iPhone and Google Inc.’s (GOOG) Android operating system continue to enjoy popularity with consumers. Microsoft’s attempt to sell phones, which it called Kin line, ended earlier this year after the phones had been on the market for less than two months.

The software giant hopes to turn its mobile fortunes around with the release of Windows Phone 7, which is expected to start appearing on phones before the holiday shopping season. Ellawala said phones running on Windows Phone 7 will drive demand for data services, which should be good news for telecommunications operators.

Ellawala acknowledged the importance of the tight integration of software and devices. In designing the Windows Phone 7 software, Microsoft included specifications for the phone chassis. “So there is more predictability in what it takes to make the hardware work with the software,” Ellawala said.

He declined to name manufacturers developing phones running the new operating system but said, “We have some major [phone makers] signed up to do devices.”

Most Windows Phone 7 applications are being created by outside developers, Ellawala said, emphasizing that the phone will have strong entertainment, social and gaming features.

“We will make it fun and user friendly,” Ellawala said. “We will also be pretty strong on the gaming side. This is an important part of Microsoft’s business.”

Separately on Thursday, Microsoft said it had launched a software-development kit for companies that want to build mobile advertising applications for Windows Phone 7. The kit is meant to help developers maximize advertising revenue.